Lower corporate tax needed: Amari

Economic and fiscal policy minister Akira Amari indicated Friday that Japan should lower its corporate income tax to that of major economies in the long run.

He also said the administration will focus on the most cost-effective policies under its current financial capacity, indicating the focus is on reducing the capital investment tax.

Finance Minister Taro Aso, meanwhile, expressed reluctance to cut the effective corporate tax rate, saying at a separate press conference, “Companies are more in favor of a tax cut for investment rather than reducing corporate taxes.”

Aso has said a corporate tax cut would be ineffective in bolstering the economy, given that over 70 percent of firms are exempt from paying the tax on grounds that their business performance is poor.

The effective corporate tax rate, consisting of national and local taxes, stood at 35.64 percent as of January for companies based in Tokyo, compared with around 30 percent in Germany, 25 percent in China and 17 percent in Singapore, according to data released by the Finance Ministry.